Porters Five Forces Analysis of the Australian Solar Energy Industry

This report covers the Porter’s five forces of solar electricity industry in Australia, including threat of new entrants, bargaining power of suppliers and customers, threat of substitute products, and competitive rivalry.

Porters Five forces of
the Australian Solar
Energy Industry

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
CONCLUSION...........................................................................................................................................4
REFERENCES............................................................................................................................................4

INTRODUCTION
Porter’s five forces can be referred to as the model which mainly identifies as well as
analyses the five competitive forces which shape the industry and also helps in determining the
weakness and strength of the industry. It is the holistic strategy framework which takes the
strategic decision away by just making the analyzation of the present competition (Hou, Wang &
Luo, (2020)). This report will cover the Porter’s five forces of solar electricity industry.
MAIN BODY
The analysis of the five forces of the solar electricity industry is narrated below-
 Threat of new entrant: This force is mainly related to the new entrants who are willing to
enter the industry. Any new entrant who wants to join the solar energy industry must
have to bring innovation and the new ways in which the things can be done. The power of
this force for the solar electricity industry is low as there is innovation, high cost and
other aspects which possesses threat on the existing companies. This makes the existing
organization pressurised to lower down their cost, pricing strategy and also provide new
value preposition to customers.
 Bargaining power of suppliers: This is concern with the ability of supplier to drive
prices up. In context to solar energy industry, the power of this force is moderate as there
are less suppliers in this industry and the suppliers take dominant position in order to
decrease the margins. Moreover, it is technological driven wherein suppliers use
negotiating power in order to extract high prices from companies (Wadin, Ahlgren &
Bengtsson, (2017)).
 Bargaining power of customers: It relates to ability of customers to drive prices low.
The buyers are seemed to be demanding which puts pressure on this industry. But due to
its rareness and innovation, the power of this force is low as customers cannot take
dominant position while dealing in this industry.
 Threat of substitute products: It is concern with availability of substitute offering. The
power of this force for this industry is moderate as there is no substitute for the solar

electricity as it is made from sunlight. Moreover, people can switch to other alternatives
such as renewable energy, electricity, etc.
 Competitive rivalry: It is concerned with number of competitors present in the market
and industry. The companies in this industry have high competition in the solar energy
industry which makes the power of this force high as nowadays everyone is switching
towards solar energy. This competitiveness affects the long term profitability of company
(Hafezi and et. al., (2020)).
The essential forces which are shaping the industry competition includes technology,
innovation, etc. as this industry is driven by it and the production of solar energy is dependent on
it as it takes the support of innovation or technology to turn sunlight into the solar plants.
CONCLUSION
It is concluded from this report that the competitive analysis of the industry can be done
by sing the framework Porter’s five forces. It comprises of five forces which tells about the
industry and how it being shaped by the drivers.
REFERENCES
Hafezi, R., and et. al., (2020). Iran in the emerging global natural gas market: A scenario-based
competitive analysis and policy assessment. Resources Policy. 68. 101790.
Hou, J., Wang, C., & Luo, S. (2020). How to improve the competiveness of distributed energy
resources in China with blockchain technology. Technological Forecasting and Social
Change. 151. 119744.
Wadin, J. L., Ahlgren, K., & Bengtsson, L. (2017). Joint business model innovation for
sustainable transformation of industries–A large multinational utility in alliance with a
small solar energy company. Journal of Cleaner Production. 160. 139-150.